The Active Care Group was formed in 2019 when 40 care providers were brought together to form a specialist healthcare business across the UK with a focus on complex care. The company is owned by a private equity investment fund, SEQI.
In 2021, Active Care Group acquired the Huntercombe Group, specialists in mental health care, from the administrators of the company Four Seasons.
Last updated: July 2024
Strategy
The Active Care Group specialises in mental health and managing complex conditions and has expanded through company acquisitions. The company was part of the Montreux Healthcare Fund, a private equity investment fund based in the Isle of Man, a tax haven, administered by Montreux Capital Management UK (MCM UK). However, following a financial crisis in the first months of 2024, ACG secured a new financing deal with Sequoia Economic Infrastructure Income Fund Limited, which is now the major shareholder, taking over from Montreux Capital Management.
In March 2021, Montreux Capital Management UK (MCM) merged The Huntercombe Group (THG) with Montreux Healthcare Fund’s operating asset, The Active Care Group. The deal included 14 freehold properties and added a mental health specialism to The Active Care Group’s learning disability and neurological care services.
The Huntercombe Group had 11 specialist hospitals, which increased the Active Group's locations to 58. Huntercombe Group was part of the Four Seasons Health Care Group, the UK’s largest independent elderly and specialist care provider. Four Seasons went into administration in 2019.
The Active Care Group covers: residential and supported living; home care; Christchurch Rehabilitation Services; Huntercombe Services; Remeo Respiratory Services; case management; and Jane Lewis Healthcare Recruitment Solutions.
Financials
Active Care Group is majority owned by Sequoia Economic Infrastructure Income Fund Limited, which took over from the Montreux Healthcare Fund, an investment fund based in the Isle of Man, and administered by Montreux Capital Management (MCM). The takeover was due to a financial crisis at ACG in May/June 2024.
The company narrowly avoided going out of business in June 2024. After months of escalating financial difficulties, an administrator was appointed 29 May 2024, who immediately sold the company’s assets in what is known as a ‘pre-packaged sale’ to avoid the company being liquidated.
The sale for over £62mn was to Gadwall Holdings Ltd, a new company set up specifically by Sequoia Economic Infrastructure Income Fund (SEIIF) to acquire Active Care Group (ACG) assets. SEIIF is an affiliate of Luxembourg-based Sequoia IDF Asset Holdings S.A. Sequoia was already a shareholder in ACG, but now becomes the leading shareholder.
The appointment of an administrator and the sale comes at the end of many months of failed negotiations between shareholders and lenders to try and ensure the survival of the company via restructuring and more loans. The company had been in financial difficulties since the end of 2022, according to the administrators report.
In May 2024, NHS England finally heard of the financial difficulties, although as already noted ACG’s financial difficulties began at the end of 2022. NHS England immediately put a stop to ACG taking any new resident patients and ordered ACG to provide daily updates on the situation.
The report from the administrators notes that the action by NHS England meant that the directors of ACG felt it would be too challenging to continue trading after the end of May and not viable to try and sell the company “with the uncertainty of the situation very likely to lead to further destabilisation.” Therefore the administrators were appointed.
Despite the level of company debt, The Independent reported that it had seen company proposals for four directors to take bonuses totalling £1m between them. When questioned by the publication, ACG confirmed that bonuses were agreed for two directors.
The Independent also saw emails which highlighted how patients would have suffered had ACG not secured the new deal.
“One email seen by the publication dated 16 May, had ACG chief executive Keith Browner say: “The Group continues to [hurtle] towards a liquidity crisis without the benefit of an agreed and deliverable solution. We will be reviewing every payment made to suppliers and creditors and withholding payment where lack of supply/service will not result in immediate harm to patients… In the second phase, we will begin to withhold payment for necessary goods and services including food, drugs and agency staff. During that phase, we will also be obliged to inform commissioners and the NHS that we are no longer in a position to safely provide care for patients.”
Fortunately for patients at the company’s hospitals the second phase was not reached, but the situation highlights how precarious a position companies owned by private equity can be in. The administrators report gives some insight into how the company ended up in such a terrible financial position.
ACG was owned by Montreux Healthcare Fund, a private equity investment fund based in the Isle of Man, a tax haven, administered by Montreux Capital Management UK (MCM UK). Since 2018 ACG had been acquiring companies, increasing its annual turnover from about £49mn in March 2018 to £192mn by September 2023.
As is common practice in private equity, these acquisitions were funded largely by debt, which increased the group’s total debt from £36mn in March 2018 to £175mn by April 2024. The acquisition of Huntercombe Group in March 2021 was one of the largest. Financial difficulties began in late 2022.
Although ACG has now been technically ‘saved’ by the ‘pre-packaged’ sale of ACG assets it continues to be owned by private equity funds. As a result, what is best for private equity fund investors will always take precedence over what is best for patients and staff.
The company also continues to be in a difficult position financially and as a result of investigations by The Independent and Sky News that began in 2022, it is also facing numerous legal actions stemming from abuse at Huntercombe hospitals (see below).
The most recent filing of accounts on Companies House for the operating company, ACG Holdco Limited (company no: 11157123) reported figures for the 1 April 2021 to 30 September 2022 with a turnover of £230.8 million and a loss of £77.1 million. In June 2024, Companies House noted that the company was in administration with accounts overdue.
Contracts
The Active Care Group provides complex care services to the NHS, local authorities and insurance companies. The business acquired with Huntercombe Group for mental health services has a number of contracts with the NHS.
Concerns
Patient safety and quality of care
Hospitals run by the Active Care Group (previously Huntercombe Group) have received particularly critical reports over many years after inspections by the CQC. An investigation by The Independent and Sky News, reported in October 2022, found that there had been a decade of “systemic abuse” of patients at hospitals owned by The Huntercombe Group (now Active Care). Patients who came forward spoke of being “treated like animals” , with the use of “painful” restraints, being held down for hours by male nurses, being stopped from going outside for months and living in wards with blood-stained walls. They also alleged they were given so much medication they had become “zombies” and were force-fed. As a result of the revelations the DHSC launched an investigation into the allegations of 22 young women who were patients in units run by The Huntercombe Group.
As a result of investigations by The Independent and Sky News Active Care Group is facing at least 54 individual clinical negligence legal actions stemming from abuse at Huntercombe hospitals.
According to court documents, ACG appears to be arguing that when they bought the Huntercombe Group legal liability for such clinical negligence claims was not transferred – the legal representative for the claimants is arguing that it was and ACG will be liable.
Dr Sylvia Tang who had been the CEO of Huntercombe for some time whilst the abuses were taking place and joined Active Care Group following the merger, resigned in June 2023.
In March 2023 the company decided to close its hospital in Maidenhead, which it had renamed Taplow Manor Hospital, by May 2023. Although this came after a threat by the CQC to close the hospital if it failed to make improvements and due to the Independent/Sky News investigation.
In April 2023, a report in The Independent on sexual offences in childrens mental health services, found that Active Care Group’s Huntercombe Hospital in Maidenhead with just 59 beds reported more than 1,600 “sexual safety incidents” in four years. The hospital was responsible for more than half of the sex investigations reported in the 209 children’s mental health units across the country. Despite warnings at a rate of more than one a day to the health service since 2019, no action was taken to stop vulnerable NHS patients being sent to the hospital as a result of the 1,643 sexual incident reports.
The Maidenhead hospital had been put into special measures by the CQC in February 2021 after an inspection raised serious concerns over the apparent over-use of medication to sedate patients, among other issues. It has since received further warning notices. However, the HSJ reports that multiple concerns were being raised about the hospital for several years before it was rated ‘inadequate’. In February 2022, the police were called in to investigate the death of a young girl in the Maidenhead hospital and admissions to the hospital were suspended.
In May 2022 the CQC limited Huntercombe to filling just 22 of its 51 beds at the Maidenhead hospital due to the concerns over patient safety. The hospital’s rating has also been suspended by the CQC. The CQC handed the hospital a formal warning due to concerns over failures in the way staff were carrying out observations of vulnerable patients. Five former patients and four parents told HSJ of poor care and practices at the unit between 2016 and 2020. Two of the families raised concerns directly to Huntercombe, as well as NHS England, local authorities and the local community provider, Berkshire Healthcare FT.
In December 2018, an inspection by the CQC of the company’s hospital in Norwich found serious concerns. The CQC took immediate action to protect those using the service, including enforcement action to remove the registration for the hospital. The Huntercombe Group then closed the service and the children and adolescents had to be found places elsewhere.
Earlier issues, include in September 2017, Watcombe Hall, was closed indefinitely after the local NHS hospital raised concerns about the number of young patients being admitted from the unit suffering from malnutrition and dehydration and in 2016, the company’s hospital in Stafford was placed in special measures and told to urgently improve in 24 areas.
Financial instability
ACG had been in financial difficulties since late 2022, but shareholders and lenders had failed to come to any agreement for a company restructuring and new loans. In May 2024, NHS England put a stop to the company taking any more resident patients and asked for daily updates on the situation. The company was on the brink of going bankrupt and into liquidation. The only option was the appointment of administrators at the end of May 2024. The administrators immediately sold ACG's assets in a 'pre-packaged sale' to Gadwall Holdings Ltd, a new company set up specifically by Sequoia Economic Infrastructure Income Fund (SEIIF) to acquire Active Care Group (ACG) assets.
The financial difficulties that ACG found itself in are typical of companies run by private equity. Since 2018 ACG had been acquiring companies, increasing its annual turnover from about £49mn in March 2018 to £192mn by September 2023. As is common practice in private equity, these acquisitions were funded largely by debt, which increased the group’s total debt from £36mn in March 2018 to £175mn by April 2024, but leading to financial instability.
Although ACG has been 'saved' by the deal with Sequoia, it is still owned by private equity so its long-term future is uncertain.
